A tax cut can best be characterized as
A)Monetary policy only.
B)Fiscal policy only.
C)Supply-side policy only.
D)Either fiscal or supply-side policy.

Question

Quizplus · Accepted Answer

A tax cut can be considered a tool for both fiscal policy and supply-side policy. Fiscal policy refers to government actions that affect the economy through changes in government spending and taxation. Cutting taxes can increase disposable income and encourage spending, which can boost economic growth. Supply-side policy focuses on increasing the supply of goods and services in the economy by reducing regulations and taxes on businesses. Cutting taxes can encourage businesses to invest and expand, leading to increased production and employment. Therefore, a tax cut can be a tool for both fiscal and supply-side policy.

A Tax Cut Can Best Be Characterized as